Final K-1: Want to take advantage of passive losses that have accrued, if possible

[lgal63]

I invested $12,500 in a real estate partnership way back in 2008. I have only received 2 distributions totaling $750 over time and my rental income (box 2) each year has been negative. I am a long time TT user and all of this has been tracked on TT from past k-1s.

In 2023, my k-1 reflected -$1,460 in rental income (box 2) , -$15,522 (box 10), $10,274 (box 11) and in box 20: A  $1 (interest income) and AG $1,375 (rental gross receipts). In box L, my beginning capital account was $7,501, a net loss of -$6,707 and an ending balance of $794. I assume the property was sold at a loss, but this was not disclosed to me. 

On the 2024 k-1, it is marked as the final k-1 and reflects -$794 in rental income (box 2) and my ending capital account in box L is $0. If possible, I want to take advantage of the passive losses that have accrued over time, but am not entirely sure how to fill out the TT prompts given what is outlined above. I assume I check that the partnership ended in 2024. Then do I check that it was a "complete disposition"? If so, do I then check that it was a liquidated partnership interest? Continuing on, I would assume the purchase date is when I initially made the investment in 2008 and I would put the sale date as 12/30/2024. As to the sale information, I am not sure what to put. $0 for the proceeds and every other entry except my partnership basis? For this entry, how do I calculate the partnership basis? 

Any expert advice would be much appreciated. Thanks so much in advance for your assistance.

[PatriciaV]

Yes, you are correct. Report the final Schedule K-1 as it appears. Indicate that the partnership ended and you sold the investment for zero dollars. Your partnership basis is also zero, as shown on the K-1. Since you still had basis as of last year, you shouldn't have passive loss carryovers for this investment. In the end, you should have no gain or loss to report.

[Mike9241]

Schedule L is supposed to be reported on the tax basis. The fact that your schedule L shows an ending capital of about $800 might indicate you have that as unrecovered tax basis and thus have suffered a capital loss of that amount. Such items do occur on private partnership's because at the original formation, certain expenses (usually syndication fees) had to be capitalized and are never deductible by the partnership.

Did you receive any instructions with the K-1? 

The only way to know for sure would be to start with that $12,500 and then add each year's profit, subtract each year's loss and distributions as shown in part III. The use of the tax basis for Schedule L was not always required.  Sometimes, the promoters reflected in income on L their assessment of the appreciation of the property, making it wildly inaccurate to use for tax purposes. 

Box 10 is probably the loss from the disposition of the property. Box 11 can be multiple items there should be a letter to go with it to identify it for tax purposes.